William Huston, AIF®, AIFA®

Even in times of crisis Delta Air turns a profit in 2022

William Huston, AIF®, AIFA®

William Huston, AIF®, AIFA®

Even in times of crisis Delta Air turns a profit in 2022

Delta Airlines, Inc. said the fast-spreading Omicron variant of the coronavirus would delay the resumption of travel by at least 60 days and contribute to losses in the first quarter, but would not affect the company's expectations of remaining profitable in the second quarter. rest of the year.

With coronavirus infection cases predicted to peak in the United States in the next seven days, the pace of travel should resume its original December trajectory in the second half of February now de results left. "We continue to find that our booking patterns for Presidents' Day and beyond are healthy," CEO Ed Bastian said in an interview. "Everyone is ready to go, ready to travel."

Bastian told CNBC that the pause to resume omicronium-related business and international travel could last up to 90 days. Although the Atlanta-based airline forecast a pretax loss for January and February, it expects a profit in March and big gains in the last three quarters and for the full year.

Delta was the first major U.S. airline to report results in a quarter marked by more than 20,000 flight cancellations, according to FlightAware.com. However, employee sickness rates among airlines that continue to operate flights on the ground may mean Delta's results are not the industry metrics to which they are accustomed. Delta was up 1.9% at $41.37 at 9:43 a.m. in New York. The stock is down less than 1% in the 12 months through Wednesday, while the S&P 500 is up 24%.

Bastian said about 8,000 Delta employees have contracted the virus in the past four weeks, although the outages have subsided in recent days. At its peak in late December and early January, the virus and winter storms forced the airline to cancel up to 10% of its flights. That reduced fourth-quarter revenue by about $75 million and cut pretax profit to $170 million, from Delta's previous guidance of $200 million to $250 million.

Unit costs were up 11.4% from the year-ago quarter because of the pandemic in 2019. Delta says the metric, an indicator of efficiency, rose 15 % in the first quarter of the past two years. "Cost expectations are perhaps the biggest sticking point for investors, as airlines (not just Delta) consistently see higher-than-expected costs," wrote Conor Cunningham, an analyst at MKM. Partners, in a note to investors. Delta's fourth-quarter adjusted earnings were 22 cents a share, a penny less than the average analyst estimate compiled by Bloomberg. Adjusted net income of $143 million led Delta to its second consecutive quarterly profit after excluding U.S. financial aid. Revenue excluding refining was $8430 million, while analysts had expected $8450 million.

Passenger numbers

Revenue has returned 74% year over year, in the run-up to the pandemic, although international passenger revenue remains at 50% amid continued travel restrictions in some countries. Bastian noted that the number of domestic business travelers in the last quarter reached 60% of 2019. Business traffic has increased since then.

Delta expects revenue this quarter to range between 72% and 76% of 2019 levels. Flight capacity will reach 85%. Delta also announced a special profit-sharing payment of $1,250 per employee set Feb. 14. The airline will pay a total of about $100 million, or about 20 % of earnings generated in the first half of 2021. Delta's profit-sharing payments peaked at $1.6 billion. the for 2019.




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